Which of the Following Items Are Included in Calculating the Markup

question 38

Multiple Choice

Which of the following items are included in calculating the markup percentage under the absorption approach to cost-plus pricing described in the text? $$\begin{array} { c c c c c c } & { \text { Variable Cost } } &&{ \text { Fixed Cost } } && \text { Desired } \\& \text { Production } & \text { Selling } & \text { Production } & \text { Selling } & \text { Profit } \\\text { A) } & \text { Yes } & \text { No } & \text { Yes } & \text { No } & \text { Yes } \\\text { B) } & \text { No } & \text { Yes } & \text { No } & \text { Yes } & \text { Yes } \\\text { C) } & \text { No } & \text { No } & \text { Yes } & \text { Yes } & \text { Yes } \\\text { D) } & \text { No } & \text { Yes } & \text { No } & \text { Yes } & \text { No }\end{array}$$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Cost of Goods Sold

Directly incurred costs associated with the production of a company’s goods for sale, comprising material and labor expenses.

FOB Shipping Point

A term used in shipping contracts to indicate that the buyer is responsible for the goods and the shipping cost from the moment the goods leave the seller's premises.

Perpetual Inventory System

This method for accounting inventory immediately notes down any purchase or sale through the use of computerized point-of-sale systems and enterprise asset management software.

FOB Shipping Point

A term indicating that the buyer assumes ownership and responsibility for goods at the seller's location, and pays for shipping costs.